Mortgage borrowing reaches record high
- 12th August 2021
- Buying Property News
Mortgage rates and multiples maintain market momentum beyond stamp duty holiday
Mortgage borrowing has reached a record-high, according to Bank of England data, driven by an increase of mortgages for first-time buyers.
Mortgage borrowing hit £17.9bn in June 2021, up 163% from £6.8bn in May 2021. There has been a rush to buy houses before the tapering of the stamp duty holiday on 1 July. Yet, even after the tapering, the housing market has maintained its momentum.
The UK Government has pledged to get more young people on the housing ladder and introduced the mortgage guarantee scheme in April 2021.
This provides first-time buyers with access to 95% mortgages from major lenders for homes with a value of up to £600,000. With the Government guaranteeing these loans, this reduces the risk for banks in the case that the borrower is unable to meet their repayments.
One major UK building society is allowing new buyers to take out loans of up to 5.5 times their annual salary, up from 4.5 times previously.
The same bank is offering a five-year fixed rate mortgage for 2.94%* on a 90% mortgage, although rates for new, first-time buyers will be higher.
Despite house prices increasing by 10.9% in June 2021*, many analysts expect these prices to climb even higher as people have more money to spend following a year of cutting back. People are using this saved up cash to pay for deposits on bigger properties.
Nationwide reported that the amounts deposited by savers increased by £10.6bn at the end of April 2021.
Much of these savings have been accumulated by those in their late 50s and are being passed on to their children towards a deposit on their first home. The so-called ‘Bank of Mum and Dad’ is another concept helping young individuals to buy their first home.
Stephen Ludlow, Chairman at ludlowthompson says, “A big increase in the disposable income of consumers following a year without holidays and restaurant spending has led to a huge increase in savings just waiting to be spent which is helping people with their deposits.”
“The increasing availability of low mortgage rates will help long awaited buyers finally get onto the property ladder. The Government is doing all it can to make this a reality for the younger generation by backing the 95% mortgages.”
*Nationwide data (June 2021) based on £500,000 purchase with a 10% deposit.
6,580 positive allAgents reviews – Top 5 Agent in the UK (2020).
ludlowthompson staff are measured by how our customers rate them via 1,000s of questionnaires. Every single questionnaire is read by Stephen Ludlow and David Thompson.
Don C via Google Reviews
I dealt with ludlowthompson for the pre-sale process of my flat. The team are very professional, friendly, informative and always reliable. Definitely a five starts experience all-round; strong recommended.
Sarah HT via Google Reviews
This was our first experience as a seller. From the moment we met the team at ludlowthompson Canada Water we knew straight away they would be the right agents for us. They were extremely professional, reassuring and led us carefully through each step of the process.
The increasing availability of low mortgage rates will help long awaited buyers finally get onto the property ladder.
FREE & INSTANT PROPERTY VALUATION
IN JUST 60 SECONDS